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Economy in Brief

U.S. Mortgage Applications Tumble
by Sandy Batten  January 27, 2021

• Declines in both purchase and refinancing applications.

• Mortgage interest rates mostly edged down but remain off recent lows.

The Mortgage Bankers Association Mortgage Loan Applications Index fell 4.1% w/w (+39.7% y/y) in the weekend January 22 on top of a 1.9% w/w decline in the previous week. Applications for both new purchases and refinancing fell last week. Purchase applications slumped 4.0% w/w (+6.5% y/y) after a 2.7% w/w rise in the previous week to their highest level in more than a decade. Applications for refinancing dropped 5.0% w/w (+65.1% y/y) on top of a 4.7% weekly decline in the previous week. The refinance share of mortgage activity decreased to 70.7% of total applications from 72.3% in the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.2% of total applications.

Mortgage interest rates mostly edged down over the past week though the prospect of further fiscal stimulus and the rollout of vaccines seem to have halted the recent general decline. In the week ended January 22, the effective interest rate on a 30-year mortgage edged up one basis point to 3.04%, its second consecutive weekly advance and the highest rate since mid-November. The effective 15-year rate slid five points to 2.51% but gave back only about half of the nine-basis-point jump in the previous week. The effective rate for a 30-year Jumbo mortgage declined one basis point to 3.26% but is still nine basis points above its series low reached a month ago. The rate on a five-year ARM fell 14 basis point to 2.74%.

The average mortgage loan size increased 0.7% w/w to $329,700 in the week ended January 22. The average size of a purchase loan rose 2.9% w/w to $395,200, a new series high dating back to January 1990. The average size of a refinanced loan slipped 1.0% w/w to $302,500.

Applications for fixed-rate loans fell 4.3% w/w (+43.4% y/y) and applications for adjustable-rate mortgages increased 4.1% w/w (-34.5% y/y) in the week ended January 22.

This survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

MBA Mortgage Applications (%, SA) 01/22/21 01/15/21 01/08/21 Y/Y 2020 2019 2018
Total Market Index -4.1 -1.9 16.7 39.7 63.0 32.4 -10.4
  Purchase -4.0 2.7 8.0 6.5 11.4 6.6 2.1
  Refinancing -5.0 -4.7 20.1 65.1 111.0 71.1 -24.3
30-Year Effective Mortgage Interest Rate (%) 3.04 3.03 2.97 3.92

(Jan '20)

3.40 4.34 4.94
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